Court File and Parties

COURT FILE NO.: CV11-431437

DATE: 20131030

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Caroline Wilson, Applicant

– AND –

Charmaine Semon and Boundless Beauties Inc., Defendants

BEFORE: E.M. Morgan J.

COUNSEL: Alexander Rose, for the Plaintiff

Charmaine Semon, Defendant in person

HEARD: October 29 and 30, 2013

ENDORSEMENT

[1] This is the fourth time this matter has been before me. The first time, on June 13, 2013, Ms. Semon was found to be in contempt of court for breaching the orders of Lederer J. dated November 14, 2011 and Master Glustein dated February 12, 2013.

[2] The second time, on July 31, 2013, Ms. Semon was found not to have purged her contempt as she failed to produce the books and records that were ordered produced by Lederer J., Master Glustein, and me. At that time I gave her one final opportunity to purge her contempt, and adjourned the matter to a date to be fixed by the Plaintiff with notice to Ms. Semon.

[3] That return date came up last week, on October 24, 2013. That would have been Ms. Semon’s third appearance, but she did not appear despite being properly served in accordance with the method set out in my endorsement of June 13, 2013. I issued a bench warrant for her apprehension. Upon being advised by Plaintiff’s counsel of the issuance of the warrant, she agreed to appear voluntarily today rather than wait for the police to execute the warrant.

[4] Formally, all of the appearances since June 13th, including the present one, have been continuations of the initial contempt motion. I will therefore consider the previous three endorsements to be part and parcel of this endorsement and will not repeat what was said there. Suffice it to say that the present hearing is the follow-up on the continued examination in aid of execution that was held subsequent to my endorsement of July 31st. As indicated above, at that time I gave Ms. Semon yet another chance to produce the documents and information and to answer the questions necessary to comply with the outstanding orders against her.

[5] In my endorsement of July 31st, I ordered that various productions be made and certain steps be taken by August 7, 2013. These included the production of personal and corporate bank statements, the request for duplicate statements from the bank if any were missing from her records, precise details of Ms. Semon’s relationship with Jennifer Kobyll, a current address for Ms. Kobyll, details of the undocumented loan to Ms. Semon from her mother, and a detailed accounting of Ms. Semon’s supposed repayment of the loan to her mother.

[6] I emphasized on July 31st that time was of the essence of that order, and that “any missed deadline or lateness in compliance with any respect of this order is deemed to be non-compliance with this order.” Despite this express admonishment, Ms. Semon did not comply with the timetable set out in the endorsement and order. Given that obtaining the duplicate bank records entailed little more than asking the bank to provide them, it is evident that she did not even try to comply with the timetable in my order. Indeed, in her subsequent examination held September 11, 2013, she conceded as much.

[7] On the eve of the September 11th examination, Ms. Semon did provide some further information about Ms. Kobyll and the loan from her mother. This information, however, was vague and generally unhelpful, and spoke of agreements with each of those persons without producing any documentary evidence of such agreements. Ms. Kobyll was said to have been paid by Ms. Semon for “consulting” fees, although the nature of the consulting and the actual services rendered were not coherently described. The arrangement with Ms. Semon’s mother was equally undocumented and unverifiable, and was described as carrying an unlikely 20% per annum interest rate. Ms. Semon also incongruously coupled her explanation of the loan from her mother with the statement that, “[e]ffective October 1st, 2013, I will officially be paying my Mother’s rental cost for her apartment of $1,100.”

[8] As a result of Ms. Semon’s continuous delays, her contradictory statements, her non-production, and her avoidance maneuvers, it has been impossible to discern why and when Ms. Semon sent large amounts of money to Ms. Kobyll and to her mother, and what has become of those funds. Given her obfuscations, it is likely that there are no legitimate business reasons for her to have made these payments in preference to the judgment debt owed to the Plaintiff. They reflect the concerns expressed by Lederer J. in his endorsement of November 14, 2011, when he ordered that Ms. Semon be examined “as to where she spent or how the $135,000 [paid to her by the Plaintiff] was dissipated”.

[9] Moreover, it would appear that these payments to Ms. Kobyll and to Ms. Semon’s mother were made in violation of a preservation order issued by Chapnik J. on October 31, 2011. In that order, Ms. Semon was restrained from dissipating or in any way dealing with her property. Given her vague, non-explanations of the approximately $110,000 paid to Ms. Kobyll and her mother, it has become apparent that Ms. Semon has transferred away assets in direct contravention of that order.

[10] It has also become apparent that Ms. Semon has been untruthful about her relationship with an acquaintance named Anthony Guido. She was asked about Mr. Guido during her July 12th examination because she had written a testimonial on the internet site of a program he runs called Infinite Principle Inc. In that testimonial, she said that Mr. Guido’s program helped her with a $100,000 project and that it turned her into a successful real estate entrepreneur.

[11] Contrary to what she wrote in the website’s testimonial, on July 12th she testified that Mr. Guido was more of a spiritual guide and that she has no business relationship whatsoever with him. When asked a direct question about whether she had paid him any money, Ms. Semon said explicitly that she never paid any funds to Mr. Guido.

[12] In her September 11th examination, Ms. Semon’s testimony took a 180 degree turn. She now says that, in fact, she gave $25,000 of the funds she received from the Plaintiff to Mr. Guido through Infinite Principle Inc. She conceded that a significant portion of the funds that she transferred to Mr. Guido’s company had been earmarked for remittance to the federal government for payment of HST on the fees paid to Ms. Semon by the Plaintiff. This directly contradicts testimony that she gave at her July examination, when she said that she did not know what happened to the money earmarked for HST, and speculated that she might have “paid bills with it”. Neither of those statements, nor the statement she made under oath that she never paid any money to Mr. Guido, were true.

[13] It is beyond doubt that during the July examination, which was specifically scheduled in order to give her an opportunity to purge her contempt, Ms. Semon intentionally made a false statement under oath in order to mislead the Plaintiff and the court about her relationship with Mr. Guido and the funds that were sent to him. Counsel for the Plaintiff submits that he still does not understand the nature of that relationship, and frankly neither do I. Ms. Semon’s testimony is that she just called Mr. Guido one day and transferred $25,000 to him “out of the blue”, in appreciation of a two-day real estate course she took from him several years previously.

[14] I cannot leave the subject of Ms. Semon’s payment to Mr. Guido without noting that the transfer of funds was done on the very day that she filed her Notice of Appearance in the current proceeding. Ms. Semon ascribes the timing of the payment to coincidence, but I do not think so. Her explanation for the payment to Mr. Guido makes no sense in its own terms, and can only be seen as an improper attempt at surreptitiously dissipating more of the funds that are the very subject of the Application.

[15] As already indicated, Ms. Semon has been in contempt of court since my ruling of June 13, 2013. She has had ample opportunity to purge her contempt since that time, but has done the opposite. She has engaged in further obfuscation and misleading of the court, and has conducted herself in a way that makes the job of determining what became of her funds and other assets virtually impossible.

[16] At the present hearing, Ms. Semon offered no real explanation for her conduct. She did indicate that she takes “full responsibility” for her acts, but beyond that she does not acknowledge that she has acted in a deceitful way or that she has disregarded court orders. She concedes that she received $135,000 from the Plaintiff, and she is fully cognizant of the fact that that money is owed back to the plaintiff pursuant to the judgment granted by Lederer J. on December 5, 2011. Her explanation for the dissipation of these funds, however, is less than contrite. As she put it in oral argument: “I spent the money as I saw fit, but I don’t feel like it was reckless. I did what I thought was the right thing.”

[17] At the hearing yesterday, Ms. Semon confirmed for me that she well understands the orders of the court and the transgressions in which she has engaged. It is clear to me that although she has not been represented by counsel for the past several appearances, she fully comprehends these proceedings.

[18] In fact, given her frequent and inexplicable disposal of substantial funds to her friends – including to Ms. Kobyll and Mr. Guido – I can only surmise that her decision not to obtain legal representation has been a conscious choice rather than a financial necessity. When she says she takes full responsibility, but that she spent the money as she saw fit, I must take her at her word. I have little doubt that she understood the ramifications of what she was doing, and is prepared to face the consequences.

[19] Rule 60.11(5) of the Rules of Civil Procedure gives the court broad discretion in fashioning a punishment for contempt. However, for all practical purposes, there are four penalty options available upon a finding of contempt: “no penalty (usually where the contempt has been purged); a suspended sentence (perhaps conditional upon some act or event occurring); a fine; or incarceration.” Niagara (Municipality) (Police Services Board) v Curran (2002), 57 OR (3d) 31, at para 20 (SCJ).

[20] Given the numerous opportunities and the many months that she has had to purge her contempt and to make full financial disclosure, and her utter failure to do what she was obliged to do in this regard, the first two options are inapplicable to Ms. Semon’s situation. In similar fashion, given the fact that she owes a very substantial debt to the Plaintiff, and not only dissipated the funds but has never paid any of the costs orders that have accompanied the many motions that the Plaintiff has successfully brought against her, the third option does not represent a realistic deterrent.

[21] That leaves incarceration as the most viable sanction. With Ms. Semon’s willful disregard of numerous orders of the court, a penalty of incarceration is necessary in order to “repair the depreciation of the authority of the court”. Doobay v Diamond, [2011] OJ No 3419, at para 44 (SCJ). Where a party repeatedly attempts to frustrate an examination in aid of execution by being uncooperative, unresponsive, or untruthful, and thereby violates the court order requiring that examination, imprisonment for contempt is an appropriate sanction. Kopyto v Clarfield (1999), 43 OR (3d) 435 (Ont CA).

[22] As indicated, Ms. Semon’s conduct has been willful and her contempt is unequivocal. The events giving rise to this proceeding, and those that have taken place since its commencement, were of Ms. Semon’s own design, and were neither a product of thoughtlessness, Standard Industries Ltd. v Rosen, 1954 344 (ON SC), [1955] OWN 262 (Ont HC), nor of “youthful exuberance”, Chiang (Trustee of) v Chiang (2007), 85 OR (3d) 425, at para 53 (SCJ). I can discern no mitigating factors to counterbalance it. Ms. Semon did not contest the contempt proceeding on June 13, 2013; however, as counsel for the Plaintiff accurately points out, that was less an act of contrition than a function of the overwhelming documentary and transcript evidence of her contempt.

[23] Likewise, while she apologized to the court on June 13th, she did little following that apology to make amends or to purge her contempt. As described above, if anything her partial disclosures and misleading testimony since June 13th seem to have been designed to feign compliance while sending the Plaintiff off the trail of the funds. As Farley J. stated at an early stage of Chiang, supra, and as Lax J. repeated at para 10 of that judgment, “the proof of that [i.e. the sincerity of an apology] will be in the eating of the pudding, not in their words.” In the present circumstances, the pudding is spoiled. Ms. Semon’s apology is worth very little in the face of her further non-disclosures and contempt.

[24] Ms. Semon has benefitted financially from her contempt. Despite Chapnik J.’s preservation order, Ms. Semon has steadily paid her mother a monthly amount of $1,100 per month and has otherwise used and dissipated the funds at issue. As already indicated, her friends Ms Kobyll and Mr. Guido have for entirely unexplained reasons ended up with a large portion of the funds owed to the Plaintiff. This has been accomplished, and was attempted to be hidden, through a concerted effort to mislead the Plaintiff and to lie under oath.

[25] This behaviour certainly amounts to what Brown J. described in Mercedes-Benz Financial v Kovacevic, 2009 9423 (ON SC), 2009 CarswellOnt 1142, at para 10 (SCJ) as “conduct that undermines one of our country’s fundamental principles”. Ms. Semon’s flaunting of court orders is not only a violation of the rights of the Plaintiff, it is an affront to the rule of law. As Cummings J. put it in Sussex Group Ltd. v Fangeat, 2003 CarswellOnt 3246, at para 50 (SCJ), “[t]he deliberate failure to obey a court order strikes at the very heart of the administration of justice.”

[26] The cases have pointed out that, generally speaking, imprisonment would not be an appropriate penalty for civil contempt if the defendant has not engaged in public defiance of the court or repeated acts of contempt. Health Care Corp. of St. John’s v. N.A.P.E., [2001] NJ No 17 (Nfld TD). That is distinctly not the case here. Ms. Semon has been given several chances to rectify her conduct, but it has been repeated at each of her three examinations in aid of execution. The court can no longer sit idly by in the face of such impunity.

[27] In the criminal law context, the legal system views it as a grave offense to make intentionally false statements under oath. The offense of perjury is punishable under sections 131 and 134 of the Criminal Code by a term of up to 14 years imprisonment. While the elements of civil contempt for which Ms. Semon has been found liable are not identical to the elements of criminal contempt, the parallel criminal offense can be taken as a measure of the very dim view that the law takes of this type of dishonest conduct.

[28] The length of the term of incarceration imposed for civil contempt varies greatly with the facts of each case. Rule 60.11(5)(a) provides merely that a person found to be in contempt may “be imprisoned for such period and on such terms as are just.” This Rule provides a scope of discretion to judges hearing a contempt motion. While compliance with court orders is mandatory, the sanction imposed for non-compliance should be fashioned on a case by case basis to suit the defendant’s conduct. Frontenac Ventures Corporation v Ardoch Algonquin First Nation, 2008 ONCA 534, at para 33-35, 40 (Ont CA).

[29] In Cellupica v Di Fuilio, 2011 ONSC 1715, [2011] OJ No 1196 (SCJ), the court pointed out that the terms can vary anywhere from 5 days to 12 months. In Mercedes-Benz, supra, the penalty was 5 days imprisonment where the contempt was finally purged on the eve of the hearing, while in Kopyto, supra, it was 10 days where the defendant did attend an examination that he was ordered to attend but did not bring the documents that were required to be brought. On the other side of the spectrum, in Chiang, supra, the defendants received a sentence of 12 months imprisonment where they engaged in flagrant and pre-meditated breaches of orders flowing from two full- length trials, while in Sussex Group, supra, the defendant received 6 months for deliberate and repetitive contempt.

[30] The present case falls somewhere between the term imposed in Cellupica, where the defendant received 90 days for his outright refusal to participate in a court ordered examination under oath, and the 10 days imposed in Kopyto, where the defendant participated in the examination but was entirely unforthcoming with the necessary evidence. Ms. Semon did attend at three examinations and did provide some of the evidence that she was ordered to provide – albeit in a way that was generally not helpful to Plaintiff’s counsel in his quest to locate the funds. I would add that where, as here, the contempt also involves disposing of assets in the face of an order preserving them, the court’s approbation must be expressed in a penalty that will be taken seriously. 777829 Ontario Ltd. v McNally (1991), 9 CPC (3d) 318 (Ont Gen Div).

[31] The mid-point between 90 days and 10 days would be 40 days, but under the circumstances I will exercise my discretion to lean to the slightly lighter side of that sliding scale. Ms. Semon has indicated that she takes care of her elderly mother, which of course may cast some light on why it is that her mother received, without any credible explanation, a portion of the funds that Ms. Semon took from the Plaintiff. Her care for her mother, of course, is not an excuse for her misdeeds, nor is it a mitigating factor in terms of her wrongful conduct toward the Plaintiff. However, it is a factor that will potentially aggravate the effect of any term of incarceration.

[32] Such family situations can be taken into account in fashioning a punishment for civil contempt. See Chiang, supra, paras 57-59. Despite the fact that Ms. Semon’s mother appears to have been a co-beneficiary of the wrongful conduct, I do not want to separate the two of them for any longer a time than is necessary.

Sentence

[33] Ms. Semon, please stand as I impose your sentence.

[34] You were found in contempt of court on June 13, 2013, and have repeated that contempt by willfully continuing to breach orders of this court. As I said before, it is important to impose on you a punishment that will revive the public’s confidence in the justice system. It is also important here to send you a specific message about the need to adhere to the law.

[35] I order that you be incarcerated for a term of 30 days in a provincial correctional institution. This term is to commence immediately, with your sentence to expire at 10:00 a.m. on Friday, November 29, 2013.

[36] Upon your release from prison, you are to re-attend at an examination to answer the questions regarding your financial matters and the disposal of the funds at issue that you have not satisfactorily answered to date. The time and place for that examination will be determined by counsel for the Plaintiff, who will serve you with 10 days’ written notice. Service of all documents on you will continue to be in the manner set out in my endorsement of June 13, 2013. The need for your approval as to form and content of the formal Order is hereby dispensed with.

[37] I am hopeful that you will use your time in prison to carefully consider your conduct in this matter. You strike me as an intelligent person who is more than capable of that kind of self-contemplation. I certainly hope that the next examination in aid of execution will be more productive as a result of the penalty that I am imposing today.

[38] I direct that a Warrant of Committal issue against you in which the last paragraph shall read:

YOU ARE ORDERED TO ARREST Charmaine Semon and deliver her to a provincial correctional institution, to be detained there for 30 days until 10:00 a.m. on Friday, November 29, 2013.

[39] I will now ask the parties to make submissions on costs.

Morgan J.

Date: October 30, 2013